Fulfilled By Amazon: Chinese Tech Entry Point?

Why Amazon is eating the world

This is the most interesting bit to me:

The broadest example of this is the Fulfillment By Amazon (FBA) program. If you’ve ever ordered a product from Amazon that says “Sold by {Company} and Fulfilled by Amazon,” you’ve seen FBA in action.

With FBA, Amazon allows third-party sellers to ship bulk inventory to Amazon — Amazon stores this inventory (which the seller still owns) in Amazon’s fulfillment center, ships the product to the Amazon customer when the order is placed and even handles all of the returns and customer service. The rates are incredibly competitive. And FBA isn’t limited to items sold on Amazon — sellers also can use Amazon’s “multi-channel fulfillment” option to ship non-Amazon orders to the seller’s customers. An example of this would be if Hydro Flask operated their own separate e-commerce store on Shopify — when a customer places an order on the Shopify store, Hydro Flask can send the order to FBA (you guessed it — via an external API) and FBA will ship it directly to the customer.

The benefit for Hydro Flask is obvious. They can have the product manufactured in China, and use a freight forwarder like Flexport to ship the product directly from the factory to Amazon’s warehouse — and thus avoid the headache (and overhead) of operating their own warehouse. For Amazon, the surface benefits are numerous: a) better utilization of excess capacity, b) increased shipping volume / leverage with UPS/FedEx, and c) revenue from the fulfillment services (which, combined with Marketplace commissions and “other third-party seller services,” totaled a whopping $6.4 billion in Q1 2017 — or 25 percent of Amazon’s total revenue).

I’d really rather not deal with the aggressive and questionable middlemen — and you and they know who they are — who sell Chinese tech items.

And who wants to wait for shipment from China — and then have to ship back to China is something is defective out of the box?

Read this bit again:

…[Amazon] ships the product to the … customer when the order is placed and even handles all of the returns and customer service…

It would seem to me that this could be the best way for China tech companies to nurture an American market without the hassle of setting up a subsidiary here.

And since they’d always want to be on Amazon’s side, they’d damn well make sure the products they shipped to Amazon for sale were of the highest quality. Having too many things returned to Amazon could get them banned.

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